Now in our fifth year, the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (the Joint Task Force) has experienced great success in coordinating the work of multiple state agencies to eliminate employer fraud and employee misclassification, but there is more work to do.

In March of 2008, Governor Deval Patrick signed Executive Order #499 which formed the Joint Task Force. The Executive Order calls for Joint Task Force member agencies to address the underground economy cooperatively based on the following objectives:

educate business owners and employees about applicable requirements;

conduct joint, targeted investigations and enforcement actions;

protect the health, safety, wage, and benefit rights of workers;

restore competitive equality for law-abiding businesses; and

preserve taxpayer dollars and insure proper payment of taxes.

In September 2013, the Executive Office of Labor and Workforce Development announced the Joint Task Force recovered more than $21 million over an eighteen month period, a total amount greater than the sum of all previous reporting periods combined by the Joint Task Force. The Joint Task Force’s 2012 Annual Report details from July 2011 through December 2012 that partner agencies recovered $21,393,652 in wage restitution, state taxes, unemployment contributions from employers, fines, and penalties as a result of referrals and cooperative oversight. Of this total, $5,949,873 was recovered from July 1, 2011 to December 31, 2011, and $15,443,779 was recovered from January 1, 2012 to December 2012. Going forward, the Joint Task Force will report on a calendar year basis.

The Joint Task Force remains focused on increasing the volume and impact of cross-agency enforcement by building on the existing processes used by member agencies. These cooperative investigative efforts raise awareness among the general public, workers, the business community, and government about the work of Joint Task Force agencies to combat the underground economy and enforce the responsibilities of employers in the Commonwealth. The ultimate goal of the Joint Task Force continues to be protecting workers and insuring an equal playing field for all businesses to compete in the Commonwealth’s economy.

What is the Underground Economy?

The “underground economy” is a term that refers to those individuals and businesses that utilize schemes to conceal or misrepresent their employee population to avoid one or more of their employer responsibilities related to wages, payroll taxes, insurance, licensing, safety, or other regulatory requirements. The underground economy also encompasses other activities such as tax evasion, payroll fraud, under-the-table work, and wage theft. These activities may include but are not limited to: paying wages in cash, skimming some or all of the cash takings, not paying overtime, paying sub-minimum wages, charging individuals for transportation or supplies essential to the work, underreporting employees, misclassifying employees as independent contractors, forcing employees to set up shell subcontractor entities, running a part of normal business activities “off-the-books,” not registering a business to avoid tax obligations or to avoid obtaining the necessary licenses and insurance policies. Operating outside the law allows businesses to have an unfair advantage by illegitimately lowering costs, therefore undercutting their competitors. This takes business away from law-abiding companies and their employees who are trying to make an honest living. This race-to-the-bottom hurts the economy, legitimate businesses, and results in the erosion of the social fabric, economic stability, wage levels and working conditions in the Commonwealth.

Have a Tip?

Workers who believe that their rights have been violated and businesses who believe they are at an economic disadvantage because of unscrupulous competitors are strongly urged to call the Joint Task Force Referral Line at (877) 965-2267, email tips to jtftips@state.ma.us, or visit the Joint Task Force website at www.mass.gov/lwd/jtf to submit complaints.

More information about the wage and hour laws is also available in multiple languages at the Attorney General’s Workplace Rights website at www.massworkrights.com.

To learn more about the Joint Enforcement Task Force on the Underground Economy and Employee Misclassification or to read the 2012 Annual Report, visit www.mass.gov/lwd/jtf.